State Will Collect Money From Gas Drillers

From the Oil City Derrick:

By Laura Legere (Staff Writer)

Natural gas drillers have to sign leases and compensate the state if they plan to collect gas trapped deep beneath publicly owned streams and rivers, according to a policy developed recently by the Department of Conservation and Natural Resources.

The policy applies to gas gathered from pads on neighboring properties – away from the streams and their banks – where wells are drilled vertically before turning and boring laterally underground.

Waterways in the commonwealth are considered publicly owned if they are, or have ever been, used for commercial trade or travel. The list and maps of the waterways compiled by DCNR include hundreds of streams throughout the Marcellus Shale region of the state.

Where the state owns the streambeds, it also owns the mineral rights beneath them.

DCNR spokeswoman Christina Novak said the state is developing a standard agreement for companies that either want to drill horizontally under streams or that will, through hydraulic fracturing, draw gas from rock formations deep under the waterways. Unlike agreements for drillers who operate in state forests, the leases will not address surface impacts because there won’t be any on state property, she said.

“This would just allow an operator to access underneath a navigable waterway from nearby but to compensate the commonwealth because it is the owner of the resource,” she said.

The agency alerted gas drillers in March that the state would begin seeking compensation through lease payments and royalties for gas removed under the waterways.

The issue emerged because the mineral rights beneath publicly owned waterways were either impeding natural gas development or drilling was taking place without the state being appropriately compensated, Ms. Novak said.

DCNR has not determined how many miles or acres of public waterways will be included in the leasing effort or how much Pennsylvania might make from current or future gas leases. It is also still exploring if it can collect money from any companies that might already have pulled gas from under the waterways.

The state signed a $6.15 million lease plus 20 percent royalty with Chesapeake Energy in 2010 for a seven-mile stretch underneath the Susquehanna River in Bradford County. It holds one other agreement, from 2000, for gas under a navigable waterway.

DCNR has created an interactive map to help operators determine which streams are considered publicly owned, but the agency also cautions in a policy summary that the list of waterways is neither official nor final.

The list developed so far is based primarily on statutory declarations of navigable waterways from as early as the 18th century, but a declaration is not required for a waterway to be considered navigable and the state says it reserves the right to add or drop streams from the list.

Publicly owned waterways in the heart of Northeastern Pennsylvania’s shale region include the Susquehanna and Delaware rivers; Tunkhannock, Bowman and Mehoopany creeks in Susquehanna and Wyoming counties; and Wyalusing, Wysox, Wappasening, Sugar and Towanda creeks in Bradford County.

http://m.thederrick.com/news/2012-06-04/Marcellus_Shale/DCNR_To_Collect_Money_From_Drillers_Who_Harvest_Ga.html